A reduced federal role in the secondary mortgage market may mean less direct support for affordable housing, and that has advocates concerned.
House Republicans have begun working on legislation to shape the postconservatorship world for Fannie Mae and Freddie Mac or their successors, and it seems clear that the days of the government-sponsored enterprises (GSEs) dominating the mortgage market will be over.
One bill approved by the House Financial Services Committee’s capital markets and GSE subcommittee (H.R. 1226) would eliminate the aff ordable housing goals for Fannie Mae and Freddie Mac mortgage purchases. That provision is likely to be included in any GSE reform legislation Congress passes.
A far more controversial measure drafted by Rep. Ed Royce (D-Calif.) would abolish the national aff ordable housing trust fund, which was supposed to be financed through contributions from Fannie Mae and Freddie Mac. The Obama administration has proposed to fund the trust fund with $1 billion in fiscal 2012, but it lacks a dedicated funding source to replace the GSEs.
At a capital markets and GSE subcommittee hearing, Sheila Crowley, president of the National Low Income Housing Coalition, pressed for the continuation of the trust fund.
Crowley noted that the trust fund is intended to insulate low-income housing from the pressures of the regular appropriations process, where housing programs are vulnerable to funding cuts.
While the GSE contributions are gone, Crowley pointed out that the Housing and Economic Recovery Act of 2008, which created the trust fund, also provided for the possibility of other sources of funding, and she urged Congress to retain the statutory authority for the fund.
Crowley told the panel that the national housing trust fund campaign will continue to work for a dedicated source of funding to replace the contributions from Fannie Mae and Freddie Mac. The campaign is a coalition of more than 6,000 national, state, and local groups.
One option, according to Crowley, is the revenue generated from any cutback in the mortgage interest deduction that may be included in tax reform legislation.
“We are open to suggestions for other ideas to fund the national housing trust fund that anyone wants to off er,” Crowley said. “Our only objection will be to funds generated by cuts to other programs that serve low-income people."
House passes fiscal 2012 rural housing funding bill
The House has passed a fiscal 2012 agriculture appropriations bill (H.R. 2112) that includes funding for the Sec. 515 direct rural rental housing loan program, but no money for Sec. 538 guaranteed multifamily loans.
The bill provides $58.6 million for Sec. 515 loans, but that amount would be trimmed by a 0.78 percent across-theboard cut approved on the House floor.
Other rural housing funding provisions, before the across-the-board reductions, include $890 million for rural rental assistance; $24 billion for unsubsidized Sec. 502 guaranteed singlefamily loans; $845.7 million for Sec. 502 direct loans; $11 million for rural housing vouchers for lowincome tenants in Sec. 515 projects with mortgages prepaid after Sept. 30, 2005; $18.3 million for Sec. 514 farm labor housing loans; $6.25 million for Sec. 516 farm labor housing grants; $22 million for Sec. 523 mutual and self-help housing grants; and $32 million for Sec. 504 very low-income housing repair grants.
Barry G. Jacobs is editor of Housing and Development Reporter, the nation’s premier source for in-depth, factual coverage of all aspects of aff ordable housing and community development. The two-part publication includes informed reports and insightful analyses in “HDR Current Developments,” and an up-to-date compilation of essential documents in the “HDR Reference Files.” Jacobs is also the author of the annually updated HDR Handbook of Housing and Development Law. For more information, call (800) 723-8077.